Loan Addiction: German State-Owned Bank to Lend Ukraine 200Mln Euros

Ukraine's economy has deteriorated since an armed conflict between Kiev and Donbass self-proclaimed people's republics' forces had erupted in April 2014 in the country's southeast. Since the beginning of the conflict, Ukraine’s national currency, the hryvnia, has been devalued almost threefold, and the GDP has been continuously decreasing.

KIEV (Sputnik) — Ukraine and German state-owned development bank KfW will sign on Thursday an agreement on a loan worth 200 million euros (some $225 mln), the Ukrainian Finance Ministry said Wednesday.

"The signing of an agreement on a loan from the German state-owned KfW in the amount of 200 million euros to support the Deposit Guarantee Fund will take place on September 3, 2015," the ministry said in a statement posted on its website.

The agreement will be signed by Ukrainian Finance Minister, Natalie Jaresko, German Ambassador to Ukraine, Christof Weil, and member of the board of KfW, Roland Ziller.

Ukraine is in talks with a committee of international creditors led by US asset manager Franklin Templeton Investments, which hold around $10 billion dollars’ worth of Ukrainian bonds.

In March, the International Monetary Fund approved a bailout package of $17.5 billion in loans over four years. But Ukraine will need to draw on other international funding sources and restructure its debt to address its total financing need, estimated by the fund at $40 billion.

On August 27, the World Bank and the Ukrainian government signed an agreement on the allocation of $500 million to Kiev.

In August, former Ukrainian Prime Minister Mykola Azarov said that Kiev's state debt is growing at a fearful rate and "even if the country gives away everything it produces this would still not be enough to meet all of its foreign debt obligations."